Volkswagen’s earnings dropped final 12 months and its profitability might enhance solely marginally this 12 months, because the automaker repositions its world enterprise to cope with shifting commerce insurance policies in the USA and difficult competitors from its Chinese language rivals.
Volkswagen is Europe’s largest carmaker, and its attain extends throughout the globe. Whereas the corporate’s measurement and scale served it nicely for many years, lately it has turn into a headache, particularly since President Trump upended world commerce practices by threatening tariffs in opposition to America’s largest buying and selling companions.
Volkswagen mentioned on Tuesday that its income was flat whereas working revenue fell 15 % in 2024, citing “a major improve in mounted prices” linked to restructuring. For this 12 months, the corporate expects its working revenue margin to be in a variety of 5.5 to six.5 %, roughly the identical because the 5.9 % margin it recorded final 12 months.
“Our outlook displays the worldwide financial challenges and the profound adjustments which can be taking place within the trade,” mentioned Arno Antlitz, chief monetary officer of Volkswagen. Among the many challenges, he mentioned, had been “an setting of political uncertainty, increasing commerce restrictions and geopolitical tensions.”
The corporate’s restructuring prices included almost $1 billion for a severance pay program linked to the executive division of the Volkswagen model. The corporate additionally reached an settlement final 12 months with the IG Metall union that included plans to chop 35,000 jobs by retirement and attrition, however with none fast closures of the corporate’s 10 factories in Germany.
An Audi manufacturing unit in Brussels closed its doorways on the finish of February, a call that value the corporate the equal of $1.75 billion that was written off final 12 months. The plant, like these in Germany, was combating excessive labor and structural prices.
Volkswagen is shifting its manufacturing in Europe to Spain and Portugal, the place power and labor prices are considerably decrease. A battery cell manufacturing unit is deliberate in Valencia, and the automaker’s new, entry-level electrical mannequin might be produced at a plant in Palmela.
In the USA, Volkswagen has pinned its hopes on the revival of the Scout model, which the corporate is betting will compete within the profitable choose up truck market. It’s going to embrace an all-electric mannequin and one other fitted with each a battery and a small combustion engine, often called a variety extender.
Regardless of efforts by the Trump Administration to get rid of subsidies and tax breaks for electrical vehicles, Volkswagen mentioned that it remained dedicated to battery know-how in all of its markets and that it anticipated to see demand for battery-powered vehicles improve in 2025.
Volkswagen faces the specter of U.S. tariffs, which Mr. Trump has mentioned he plans to impose on imports from Europe in addition to Canada and Mexico. Along with its meeting plant in Chattanooga, Tenn., Volkswagen has a plant in Puebla, Mexico, and is constructing a battery cell manufacturing unit in Canada.
Oliver Blume, chief govt of Volkswagen, mentioned he was ready till a concrete tariff technique emerged from Washington, and authorities officers in Brussels and Berlin staked out their positions earlier than the corporate would start speaking with the Trump administration.
“We’ll take up talks when the overall framework is evident,” Mr. Blume mentioned.
Pointing to the pushback from U.S. automakers that led Mr. Trump to pause tariffs on vehicles and automotive elements from Canada and Mexico, Mr. Antlitz indicated that Volkswagen was additionally hopeful a decision could possibly be reached that mirrored the complexity of the cross-border car trade in North America.
“Within the auto trade, you possibly can’t simply localize a car in a single day,” he mentioned. “We should see what’s going to occur.”
Later that day, Mr. Trump escalated his combat with Canada, saying that he would double tariffs on metal and aluminum imports and put tariffs on Canadian automotive imports so excessive that it might “completely shut down the auto manufacturing enterprise in Canada.”
In China, one other key marketplace for Volkswagen, the German carmaker is struggling to compete with native opponents which have been faster to tailor their choices to clients who prize participating software program and leisure of their vehicles. Volkswagen is anticipating to see losses of as much as 1 billion euros ($1.1 billion) in China this 12 months, Mr. Antlitz mentioned.
Final 12 months, Volkswagen arrange a three way partnership with the Chinese language carmaker XPeng, as a part of its “in China for China” technique, which it hopes will assist it to claw again market share misplaced to opponents like BYD and Xiaomi.
